HENLEY-ON-THAMES, UK:  The effects of the US credit crunch worsened in May within the Eurozone - the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) that comprise the fifteen nation euro currency area.

Reflecting current pressures in both the service and manufacturing industries, The Royal Bank of Scotland /NTC Eurozone Composite Output Index fell from 51.9 in April to 51.1 in May, registering the weakest rate of growth since July 2003.

Growth was unchanged on April's 32-month low in manufacturing and slowed to near-stagnation in services, dropping to a pace equal to January's four-and-a-half year low.

Germany registered the strongest rate of expansion of the big-four for the second successive month, with the overall rate of growth slipping only marginally from April's robust seven-month high.

Output growth slowed for the third successive month in France, dropping to only a modest pace of expansion and showing the smallest monthly rise in output since July 2003. 
In Italy output fell for the fifth successive month, and at the steepest rate since May 2005. Output also fell for the fifth month in Spain, with the rate of decline again far sharper than in Italy.

Key indicators from May's index are ...

  • New Business
    This fell for the first time since July 2003 as a decline in manufacturers' new orders was accompanied by almost no growth in service sector incoming new business.
  • Employment
    Growth was the weakest rate since November 2005. Service sector job growth was the lowest for 33-months, while manufacturing staffing increased at the weakest pace since last October.
  • Input price inflation
    This eased for the second month in a row, down from March's peak to reach a three-month low. However, despite the easing, the rate of increase remained well above the survey's long-run average, reflecting higher oil, energy and food prices in particular.
  • Cost pressures
    These eased in all big-four countries except Italy.
The report is based on original survey data collected from a representative panel of over 5000 companies across the euro area's manufacturing and service sectors.

The data are currently based on the results of surveys carried out in Germany, France, Spain, Italy, Austria, Ireland, Greece and the Netherlands (plus the UK, Poland and the Czech Republic for the EU data), covering over 6,000 manufacturing and services companies.

These countries together account for an estimated 92% of total Eurozone gross domestic product. 
Questions are asked about real events and are not opinion based.

For further information on the Eurozone reports click here.

Data sourced from NTC Research (UK); additional content by WARC staff